The film is based on the true story of Joseph D. Pistone, an FBI undercover agent who infiltrated the Bonanno crime family in New York City during the 1970s, under the alias Donnie Brasco, aka "The Jewel Man". Brasco maneuvers his way into the confidence of an aging hit-man, Lefty Ruggiero, who vouches for him. As Donnie moves deeper into the Mafia, he realizes that not only is he crossing the line between federal agent and criminal, but also leading his friend Lefty to an almost certain death.

Donnie Brasco is actually Joseph D. Pistone, an undercover FBI agent. His wife hates his job, and the couple have heated arguments throughout the film. At home Joseph's behavior becomes more and more like the criminal he pretends to be. Their last dispute becomes physical. Joseph hits his wife, then remorseful, he says, “I am not becoming like them, Maggie, I am them.”

After the Bonanno family's street boss is killed, Sonny Red assumes the new position and Sonny Black is promoted to captain, angering Lefty, as he provided for Sonny Black's family whilst the latter was in prison. As the crew runs a series of successful shakedowns and hijackings in Brooklyn, Donnie collects more information for the FBI.

Due to Joseph's success at infiltrating the Mafia, a man from Washington, Dean Blanford, takes interest in the case. He asks Joseph to incorporate a Miami-based FBI agent, Richard “Richie” Gazzo, into the operation. Joseph is reluctant, but convinces Sonny Black and crew to meet Richie in Miami.

In Miami, Donnie and Lefty plan to run Richie's club on their own, and attempt to impress Florida mob boss Santo Trafficante Jr. with a yacht trip. However, Sonny Black reaches out to Trafficante first, angering Lefty, especially when Sonny Black tells Donnie to work for him and run the club as an unofficial made man. Donnie reconciles with Lefty when Lefty's son nearly dies of a drug overdose. On its opening day Sonny Black's club is raided by Miami police on orders from Trafficante himself, who was in allegiance with Sonny Red. Suspecting the latter is responsible, the crew—without Donnie—kill Sonny Red and two rival gangsters, as well as Nicky Santora (whom Sonny Black suspects tipped off Sonny Red about the club). With Sonny Black the new street boss, Donnie is tasked with finding and killing Sonny Red's son Bruno.

Knowing he will have to end his case and make arrests, Donnie tries convincing Lefty to escape his criminal life. Lefty confronts Donnie about working with the FBI. If Donnie does not kill Bruno, then Lefty will kill Donnie. Before either murder can be committed, FBI agents rush in to arrest both potential killers. FBI agents reveal Donnie's true identity to Sonny Black and the crew. Lefty walks off to his implied death for letting Donnie infiltrate the gang and Joseph is awarded with a check and medal for his work.

Louis DiGiaimo, who worked as a casting director for Barry Levinson, was a childhood acquaintance of Joseph D. Pistone, and served as a consultant for his book Donnie Brasco: My Undercover Life in the Mafia. Once the book came out, Levinson's company, Baltimore Pictures, purchased the rights, with screenwriter Paul Attanasio set to write the script. Stephen Frears would direct and Tom Cruise would play Pistone/Brasco. In 1991, the film was postponed due to the release of Goodfellas, as the producers felt there was not enough room for two hyperrealistic Mafia films. When the project was resurrected in 1996, Frears was replaced with Mike Newell, and Johnny Depp was cast as Pistone/Brasco. Al Pacino was the only actor kept from the first attempt to make the film. Pistone was hired as a consultant, helping Depp and Pacino develop their characters.[3]

Donnie Brasco has received critical acclaim. Review aggregate Rotten Tomatoes reports that 87% of critics have given the film a positive review based on 55 reviews, with an average score of 7.8/10, making the film a "Certified Fresh" on the website's rating system.[4] At Metacritic, which assigns a weighted mean rating out of 100 to reviews from mainstream critics, the film received an average score of 76, based on 21 reviews, which indicates "Generally favorable reviews".[5]

Critics praised Depp's performance especially: a Salon.com review hailed Depp's performance as "sensational."[11]New York Magazine called him "graceful" and found his acting highly believable: "We can believe that the mob might take him for a tough, ambitious young hood—he has the wariness and the self-confidence that creates an aura."[12]

According to Charles Taylor, writing in Salon.com, both Pacino and Depp are "in top form"; remarking on Pacino's frequently working with younger actors (Sean Penn, John Cusack), Taylor called Donnie Brasco "the best in this series of duets" and singled out Pacino's skills: "His final scene is all the more heartbreaking for the economy of gesture and feeling he brings it. It's an exit that does justice to both the actor and the role, and it leaves an ache in the movie."[11]Entertainment Weekly reserved its highest praise for Pacino: "If Donnie Brasco belongs to any actor, though, it's Al Pacino."[6]

In his sophomore novel "Unfinished Business: Operation Donnie Brasco" Special Agent Pistone described the movie as 90% accurate. As for the remaining 10%, he points in which scenes the filmmakers took some artistic license:

The movie ending shows Sonny Black being visted WITH Lefty and Boobie at Sonnys club during the day time to show the 'Street Boss' the pictures of S.A. Pistone with those very agents holding up his badge and FBI ID to prove Donnie Brasco was an undercover op. In fact they went quietly to Sonnys apartment at 6am waking him up, in case he wanted to keep the visit quiet, or to make a secret deal with the govt. As in the movie they gave Sonny their cards implying he could flip, he replied "I don't know him, but if I see him I'll know he's an FBI agent" but did not believe it at first, thinking maybe they'd brain washed Donnie, but eventually he came to accept it, called the bosses, was called to a 'sit down' and according to Pistones second book 'Donnie Brasco: Unfinished Business' he went, leaving his jewelry with Charlie the bartender, and said "I'm going to a sit down, I don't know if I'm coming back". Sonny went to the 'sit down' and was shoved down the stairs in the basement and shot, the shot didn't kill him, a "gangster to the last" as Pistone said, he looked at his murderer and said "go on hit me again and do it right this time!!" and was killed instantly with the next shot. Lefty was taken into protective custody as they had definite info about a hit on him, and was saved by jail, for refusal to cooperate he later got a pass from the next guy to take Sonnys street boss position 'Big Joey' Massino, who himself later flipped and turned states evidence.

The end of the movie has Lefty saying to his girlfriend "if Donnie calls, tell him if it was gonna be anyone, I'm glad it was him", these words were actually spoken by Sonny Black, who had as close, if not closer, a relationship with Brasco than Lefty. Black, even knowing what would happen to him, was a "true gangster" who "lived by the rules of his world" and even knowing he would be killed he still said "he did his job and he did it right". Lefty, Pistone explains, hated him with a passion when the Brasco operation ended and when the FBI asked Pistone to go to Lefty and ask him to turn states evidence, Pistone said there was no way he would ever flip, neither would Sonny , and that Left might leap across the room and try to strangle him for just asking. The three FBI agents (the same ones who had visited Sonny to tell them about Brasco being a fake) went to Lefty to offer witness protection and he "let loose a stream of expletives" as his response.

The movie shows Pistone going on the hit with Lefty for Bruno, this did not happen, it was an exploration of what S.A. Pistone said could happen if he was in the compromising situation where he had to make a hard choice. He said "if it was a choice between letting a civilian get killed and risking my life to save them I'd risk my life, but if they're gonna whack a gangster, or whack me if I don't whack a gangster, the gangster is getting it, I know the FBI would declare me a rogue agent, but that's what I would have chose"

The movie makes it seem like Brasco was in on the 'three capos' hit, even indirectly. He was not, Sonny wanted him in on the hit to get him into the family as a made man (which requires participation in a hit) but Big Joey Massino veto'd it saying he didn't know Brasco enough yet.

Nearly all of the conversations, background conversation and even Leftys phraseology like "aint the question" were lifted direct quote from real life.

The 'Fugazi' diamond was not Leftys it was a member of Gillys crew, which was Brascos first rung up on the ladder, at Gillys he began hanging out with Lefty, then began to hang out with Lefty and move up in the organization.